Gasoline Prices to Cool This Fall

Gasoline prices are edging down now that summer is about over. The national average price of regular unleaded slipped three cents from a week ago, to reach $2.19 per gallon. One year ago, drivers were paying an average of $2.57 per gallon. Diesel is down a penny from a week ago, to $2.41 on average. Barring a sudden spike in oil prices or a hurricane that shuts down refineries along the Gulf of Mexico, prices of both gas and diesel should continue to decline in coming weeks, with gas prices nearing $2 per gallon. Demand is still weak due to the COVID-19 pandemic, with little sign of driving returning to normal anytime soon.

Oil prices are holding steady, with West Texas Intermediate crude oil recently trading at about $37 per barrel. That’s down about $5 from where WTI traded for much of the summer. The end of the summer vacation season plus renewed concerns about oversupply suddenly sent oil prices dropping as September began. We think WTI will continue to trade from $35 to $40 per barrel as autumn continues. Markets look to be well supplied, given the big drop in oil consumption caused by the pandemic.

Natural gas prices are pulling back after a sharp late-summer rally. The benchmark gas futures contract recently traded at about $2.31 per million British thermal units, down from a recent high of $2.66 in late August, but still well above the $1.50 level reached earlier this summer. Now that much of the country is experiencing cooler, autumnal weather, gas demand should be fairly muted. The hot summer caused strong demand as gas-fired power plants worked hard to keep air conditioners running, and a cold winter would lead to a jump in heating demand. But for now, with the weather mostly between those two extremes, gas consumption figures to be modest, with prices likely to slip a bit further.